CHAUTAUQUA COUNTY OFFICE OF THE COUNTY EXECUTIVE Gerace Office Building – 3 N. Erie St. – Mayville, NY 14757-1007 (716) 753-4211 – FAX (716) 753-4756 – borrellog@co.chautauqua.ny.us - www.co.chautauqua.ny.us GEORGE M. BORRELLO County Executive Chautauqua County Executive George M. Borrello’s 2020 Tentative Budget Presentation Presented to the Chautauqua County Legislature on September 25, 2019 Thank you Mr. Chairman, members of the Legislature, my fellow county employees and everyone here tonight. It’s my pleasure to be here to outline my tentative budget for 2020. I’d like to start off by thanking everyone involved in developing this budget including all department heads and managers. I’d like to especially thank Finance Director Kitty Crow and Budget Director Kathleen Dennison and their team in the Finance Department for their efforts and diligence. Also, many thanks to my
assistant Dan Heitzenrater for helping me to distill this down into this budget presentation. This year we faced a new reality here in the Empire State . . . Sorry I have the wrong Empire. This year we faced a new reality here in the Empire State. A shift in the State legislature has led to dramatic increases in new unfunded mandates, new
regulations and new burdens on local government and taxpayers. This new reality, along with other hurdles including unmet obligations by the State, created a challenging scenario for our 2020 Tentative Budget. Let me highlight just a few of the challenges we faced going into this budget process. New York State’s tenuous agreement with the Seneca Nation of Indians to share revenues under the Tribal Compact is a strained situation. Payments to the State are in litigation right now and money owed to the municipalities, including Chautauqua County, have not been paid since 2016. Even though the dispute is ongoing, those payments are the State’s obligation to municipalities and should not be effected by negotiations between the State and the Seneca Nation. To date, the State is in arrears to Chautauqua County to the tune of about $2.2 million. That will increase to about $3 million next year. So, after three years of delays and broken promises, we have chosen not to budget for this funding in the coming year.
New, and largely unfunded, election reforms have created a large gap in our Board of Elections budget for 2020. While we are hopeful that early voting may increase voter participation, it will come at a high cost to local government. Increases in the State’s minimum wage along with a dramatic increase in Election Inspector work hours for the 10 days of voting will result in a local share increase of about $115,000 just to meet the minimum requirements set by the State. Adding in the costs of new electronic poll books, the net increase in local share for the Board of Elections in 2020 is estimated to be a total $205,000, which equates to a nearly 22 percent increase in the Board of Elections local share costs.
So-called criminal justice reforms will have a major impact on counties across the State in 2020. Not only will the State’s cashless bail plan force the release of criminals onto our streets - with nothing but an appearance ticket - it will create an unnecessary burden on county government. When those accused don’t show up for their court dates, our county law enforcement officials are responsible for bringing them in for trial. Sheriff Jim Quattrone has stated that he will need a “warrant squad” to accomplish that requirement. That will heavily burden law enforcement and the taxpayers. In addition to cashless bail, the new unrealistic rules for discovery - which is information that must be turned over in court cases - will strain our District Attorney’s Office, Sheriff’s Office and Probation Department. According to our DA, Patrick Swanson, currently only 20 percent of cases require full discovery and it is typically completed over the course of months. Now, with these new mandates, 100 percent of cases will require discovery and it must be turned over within 15 days. This will mean hundreds of hours of additional work that must be completed in a compressed timeframe and - you guessed it - without any financial support from the State. Both our District Attorney and Sheriff have outlined the challenges facing county government with these new unfunded mandates in the coming year. But the State’s lack of guidance, training and funding for this new reality will create unpredictable situations and outcomes. Therefore, we must be prepared for the inevitable fallout from both a public safety standpoint and a budgetary standpoint.
When the NRG plant in Dunkirk was generating power, not only was it a key economic driver, NRG was also the single largest taxpaying entity in the county. The transition aid we receive from the State was designed to bridge the tax revenue gap while the plant converted from coal to natural gas. But now, with that re- powering being taken off the table, the dwindling financial support is creating a growing deficit. You can see from this chart how that support dwindles. The county is working with the City of Dunkirk on a feasibility study to reimagine the future for the power plant and I am confident we will be successful. In the meantime, that loss of tax revenue must be adjusted for in our budget.
That’s a summary of just some of the challenges we face and how it impacts our budget. Those are the stark realities. So what does all this add up to for us? It added up to us starting this budget process with a $6.8 million shortfall. So if we had stayed with the status quo, it would have resulted in one of the following three scenarios:
To keep our tax rate flat at $8.37 per thousand would have required using $2.1 million out of the undesignated fund balance. That would result in the fund balance dipping 4.2 percent, which is well below the 5 percent level that is called for in our county financial management policy. The next option would be to increase the tax rate by nine cents to $8.46 per thousand. That is the maximum increase allowed while still staying below the tax cap, but still using $1.4 million from the undesignated fund balance to do so. This would leave the fund balance at 4.6 percent with a tax rate increase and a fund balance below the 5 percent level. The third option to keep the fund balance above 5 percent was a tax rate increase of 26 cents per thousand. Again, these were the options we had before we went back to work on the tentative budget. So how did we address this? We started off with a realistic assessment of our revenues and expenses. For example, we did not budget for the estimated $750,000 in tribal compact revenue, which I previously mentioned. On a more positive revenue note, the landfill’s revenue from 2018 was exceptionally good. So those proceeds are reflected in the 2020 budget, which is where that accrued revenue is supposed to be allocated.
Many positions throughout county government are currently vacant at any given time. Most of them are just temporarily vacant while the hiring process continues. Typically many of those positions are budgeted for at a full year’s expense even though they may go months without being filled. We have analyzed those vacancies and applied those estimated savings in this budget. This gives us a more realistic estimate for payroll expenses in the 2020 budget. Keeping our county roads safe to travel on during the winter requires a tremendous amount of road salt. Each year, we estimate how much is needed and budget accordingly. This season, the cost of road salt is estimated to increase from $68 per ton to $76 per ton, which is a 12 percent increase. That will have a significant impact on next year’s budget for road salt, especially. So we have estimated as realistically lean as we can in this budget. As I mentioned before, the impact of the new discovery rules and other mandates is going to have a significant impact on our District Attorney’s Office. We have added a nominal increase in the DA’s budget to assist, but not as much as was originally requested. We started out 2019 with a very lean adopted budget as part of our Bushel Full of Pennies Budget . Then, as the year progressed, revenue shortfalls appeared and we made further modifications and operating cuts to the 2019 budget. As a result, we went into the 2020 budget with no surplus funds to carry over to start us off.
So with all of that said, let’s take a look at a little history of our county tax rates. If we go back to 2006, you’ll see that we had a property tax rate of $9.49 per thousand. Also, our sales tax rate was higher than it is now at 8.25 percent. Also, in 2006 we did not have sales tax exemptions for clothing or home fuel like we do currently. Yet despite all of that, our tax rate today is about a $1.12 per thousand lower than it was 13 years ago. If you look at the scenarios I presented earlier, the tax rates would have to increase to $8.46 -to the tax cap limit- while still using fund balance, or even higher to $8.63-beyond the tax cap- to close the gap without using fund balance.
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